1. ' This suit has been filed by M/s. Dabinovic (Monaco) SAM., plaintiff as an authorised agent of M/s. Nafin Naviera-Y Financiera Ltda under section 2 of Admiralty Jurisdiction of High Courts Ordinance, 1980 (hereinafter, referred to as the said Ordinance) against m.v. "PLUTON 1", Yugoslavian Flag (Defendant No,1) M/s. RO Dalmatinsk A. Plovidba, defendant No,2 and United Marine Agency (Pvt.)
2. Ltd. defendant No,3 for recovery of U.S. $ 371.175.88 and FRF-59.839.89 or its equivalent in Pakistani Currency with interest at the rate agreed and accepted under the loan agreement.
3. ' According to the plaintiff, the defendant No,2, who had described themselves as ship-owners and operators of several vessels, had approached the plaintiff "for grant of loan for U.S. $ 440.000 to be applied for payments of their internal current repairs expenses which was an immediate necessity affecting the operation of fleet of the vessel" and on 8th November, 1991 a loan agreement was executed and signed by the defendant No,2. The defendant No,2 and its sister company, namely, DP. Shipping Company Ltd., Panama, had also signed two letters of guarantee for repayment of the said loan. According to the plaintiff, the amount of loan was drawn and fully utilized by the defendant No,2 as per agreement. Subsequently on 23rd March, 1992 the defendant No,2 made payment of the first instalment which was actually due Dn 12th January, 1992 but payments for further two instalments falling due on 12th March, 1992 and 12th May, 1992 were at the request of the defendant No,2 and by mutual consent of the parties, postponed for a further period of six months.
4. But thereafter the defendants neglected and failed to make payment of any instalment and or to discharge the loan. According to the plaintiff, in addition to the repayment of the said loan amount, the defendant No,2 had also agreed to pay to the plaintiff commission of 1.25% on all sales of the fleet that might occur during the loan repayment period and according to the plaintiff one vessel i.e. m.v. "IGMAN" was sold by the defendant No,2 but the defendants have neglected to pay the amount of 59.839.89 French Francs due and payable to the plaintiff. In the circumstances, the plaintiffs have claimed that they are entitled to recover from the defendants an amount of U.S. $ 371.175.88 and further a sum of French Francs 59.839.89.
5. ' The plaintiff has further asserted that according to the enquiry made by them, they have been informed that vessel m.v. "PLUTON-I, defendant No,1 is under bare boat charter with defendant No,2 which according to the plaintiff means that the defendant No,2 are responsible owner of the vessel chartered with them and are in effective control and possession of the same and by its exclusive operations are earning freights from its various voyages and are appropriating the same.
6. ' The plaintiff by an application filed with the suit have also applied for prohibitory order against the said vessel, defendant No,1 which is at present berthed at Karachi Port and on 27-2-1993, the following interim order was passed xi the said application filed by the plaintiff: "Notice to the defendant No,1 as well as to defendant No,2 through defendant No,3 for 28-2-1993. Till then the K.P.T. should not give clearance to the ship to leave the port."
7. ' Thereafter this order was extended from day-to-day and is operative till today. Mr. Iqbal Siddiqui, Advocate has appeared on behalf of Master m.v. "PLUTON-I", defendant No,l. The notice issued to defendant No,3 was served but the notice issued to defendant No,2 through defendant No,3 was returned as according to endorsement the defendant No,3 was not authorised to receive the same on behalf of the defendant No,2. The defendant has filed counter-affidavit and has raised following objections on behalf of the said defendant No,1---
(i) that the loan was allegedly advanced by M/s. Nafin Naviera-Y Financiera Ltda. (hereinafter referred to as "Nafin") to defendant No,2 and not by M/s. Dabinovic (Monaco) S.A.M. (hereinafter referred to as "Dabinovic") who have filed the present suit;
(ii) that a suit in the name of the agent for disclosed principle cannot be instituted;
(iii) that no proper or valid power of attorney has been filed in favour of Dabinovic from Nafin;
(iv) that no proper or valid power of attorney has been filed in favour of Mr. Maqbool Baqar who has signed and filed this suit on behalf of Dabinovic;
(v) that the suit filed by the plaintiff is not maintainable under the Admiralty Jurisdiction of the High Courts Ordinance, 1980 as the claims made by the plaintiff are outside the scope of the said Ordinance;
(vi) that the defendant No,2 are neither the owner nor beneficially owner of the vessel in question.
8. ' Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has pointed out that the copy of the loan agreement filed by the plaintiff with the plaint, shows that Nafin were the lender and Dalmatinsk A Plovidba (hereinafter referred as "Dalmatinska") were the borrower. But the present suit has been filed by Dabinovic in their own name, who claim to be authorized agent of Nafin. He has submitted that a suit cannot be filed by an agent of a disclosed principal in its own name. He has further submitted that even otherwise no proper or valid power of attorney executed by Nafin in favour of Dabinovic has been produced or filed. At the time of hearing of arguments on 10-3-1993, a photostat copy of a document said to by general power of attorney by Nafin in favour of Dabinovic was produced by the learned counsel for the plaintiff. This power of attorney is neither stamped nor countersigned by Pakistan embassy. There is no seal of Nafin on this copy of the pow;r of attorney.
9. ' Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has further pointed out that the plaint and Vakalatnama in this case have been signed by Mr. Maqbool Baqar, on behalf of the plaintiff.
10. But no proper or valid power of attorney executed by Dabinovic in favour of Mr. Maqbool Baqar has been produced or filed. On 10-3-1993 at the time of hearing of arguments a photostat copy of a document said to be a power of attorney by Dabinovic in favour of Mr. Maqbool Baqar was produced. This power of attorney is also neither stamped nor countersigned by Pakistan Embassy.
11. There is no seal of Dabinovic on this copy of the power of attorney. It is further significant to note that in this power of attorney there is no reference to the power of attorney said to have been given by Nafin to Dabinovic. This power of attorney authorizes Mr. Maqbool Baqar to file the cae in the name and on behalf of Dabinovic and not on behalf of Nafin. Mr. Hassan Zafar, learned counsel for the plaintiff has failed to give any satisfactory reply to these objections. He has submitted that there was extreme urgency for filing the suit before the departure of the defendant No,1 from Karachi Port, therefore these formalities have not been complied with and these will be complied with in due course. According to him these are technical and procedural objections, which in the circumstances of the case and in interest of justice be ignored. However the objections raised by the learned counsel for the defendant No,1 cannot be ignored by merely terming the same as technical or procedural. Moreover, the fact remains that even till today i.e. after about 15 days of the filing of the suit, the plaintiff has failed to rectify the mistake in filing the suit in its own name.
12. The plaintiff has also failed to produce and file properly executed, stamped and duly attested power of attorney. In the circumstances, neither the suit has been filed in the name of the porper person nor it has been signed and verified by a duly appointed attorney.
13. ' Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has pointed out that in the suit filed by the plaintiff an amount of US $ 371.175.88 has been claimed on the basis of loan agreement and an amount of French Francs 59.839.89 has been claimed for the alleged commission on the sale of a vessel. According to the learned counsel both the claims are outside the scope of the he provisions of the said Ordinance. On the other hand, Mr. Hassan Zafar, learned counsel for the plaintiff has relied upon section 3(2)(m) and (q) of the said Ordinance, which reads as under:-- "3 (1) .................................................................................................................................
(2) The admiralty jurisdiction of the High Court shall be as follows, that is ',to say, jurisdiction to hear and determine any of the following causes, questions or claims---
(m) any claim in respect of the construction, repair or equipment of a ship or dock charges or dues.
(q) any claim arising out of bottomry or respondentia....................
14. ' According to the learned counsel for the plaintiff under the agreement dated 8-11-1991 the loan was taken by the defendant No,2 from Nafin for repairs of its vessels as such the claim for the amount of US $ 371.175.88 is covered by section 3(2)(m) of the said Ordinance.
15. ' Under the loan agreement dated 8-11-1991, the purpose of the loan has been specified as under: "4. Purpose of loan.---The total amount of this loan will be used for the DALMATINSKA PLOVIDBA internal current repairs expenses."
16. ' Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has submitted that in this clause the purpose of loan has been specified as "internal current repairs expenses" of Dalmatinska. Neither the expression "repair of the vessel" has been used nor the name of any vessel has been specified.
17. It has been further pointed out by him that according to. the statement of account filed by the plaintiff alongwith the plaint, the amount of loan was transferred by United Overseas Bank Geneve to M/s. Dalmaplov Shipping Co. Ltd. and not to the defendant No,2 and it has nowhere been shown that the alleged loan was in fact used for carrying out repairs of the vessel and if so which vessel.
18. He has further emphasised that in any case, it has not been shown that the alleged loan was at any time used for the repair of defendant No,1 vessel. He has further submitted that under section 3(2)(m) claim in respect of, repair of a ship can be entertained but not a claim based on a loan said to have advanced for carrying out the repairs of vessels generally. Learned counsel for the defendant No,1 has further submitted that the jurisdiction of this Court under OF said Ordinance is limited and restricted to the nature of the claims specified under the said Ordinance and it cannot be enlarged by adding words which do not find place in the statute. Mr. Hassan Zafar, learned counsel for the plaint has, however, in this connection referred to the following passage from La Lexicon by Mukherjee, Vol. I, p. 865: "The words "in respect of " admit of a wide connotation: Lord Geene M.R. In Cunard's Trustees v.
19. Inland Revenue Commissioner (19' 174 174 L.T. 133 calls them colourless words. The Supreme Court in S.S. Doab Sugar Mills Ltd.'s case (1960) 2 S.C.R. 926: AIR 1960 SC 695 construing these words in section 3(14) of the Indian Railways Act, 1890 has held that they are very wide."
20. ' In the context of section 23(IB) Foreign Exchange Regulation Act, 1947, 'in respect of has been used in the sense of 'being connected with'."
21. In this connection he has also relied upon PLD 1998 kar. 44, wherein after considering PLD 1986 Kar.447, (1985) 1 AER 695 and 1983 CLC 886, it was held as under:-- "The result of the above authorities is that the expression "arising out of in paragraph (H) of subsection (2) of section 3 of the Ordinance of 1980 is the equivalent of the expression "connected with" and a claim, whether founded in contract or tort, notwithstanding that there is no contract directly between the parties to an action, would fall within the Admiralty jurisdiction provided that it arises out of, in the sense of being connected with, an agreement of the kinds specifi paragraph
(H) viz. an agreement relating to the carriage of good ship or to the use or hire of a ship."
22. In view of above-noted decisions, learned counsel for the plaintiff has contended that the expression "in respect of in para. (m) of subsection (2) of section 3 of the said Ordinance should also be considered as equivalent of the expression "connected with".
23. ' Even if the submissions made by the learned counsel for the plaintiff are accepted and the expression "in respect of in para. (m) of subsection (2) of section 3 of the said Ordinance is treated as equivalent of the expression "connected with", even then the fact will remain that the claim made by the plaintiff for US $ 371.175.88 in this suit is based upon a loan agreement and it is neither in respect of repairs nor connected with the repairs of a vessel. As regards the remaining claim for French Francs 59.839.89, for commission on sale of vessel, it is totally outside the scope of the provisions of the said Ordinance, because this claim is not even based on the alleged loan agreement. Mr. Hassan Zafar, learned counsel for the plaintiff has further argued that the claim of the plaintiff in this case is in any way covered under section 3(2)(q) of the said Ordinance, which relates to a claim arising out of bottomry. According to the learned counsel, the defendant No,2 and its sister concern M/s. D.P. Shipping Company Ltd. had executed two letters of guarantee which, are in the nature of bond and quite similar and akin to "Bottomry Bonds". The said 2 letters dated 8-11-1991 read's as under:--- "In respect of the loan you allowed to us in the amount of US $ 440.000.00 in accordance with the LOAN AGREEMENT dated 8th November, 1991 we hereby irrevocably guarantee that we shall duly repay the loan in 3 two-monthly instalments, the first instalment being due 12th January, 1992, out of the earnings of the vessels which are in our ownership or, out of the earnings of the vessels which are on Time Charter or Management with us. Simultaneously, we hereby confirm that only one DAUGHTER COMPANY actually, D.P. SHIPPING CO. LTD. PANAMA exists in our ownership and under our control.
24. ' In respect of the loan you allowed to DALMATINSKA PLOVIDBA VELALUKA (our mother company) in the amount of US $ 440,000.00, we hereby irrevocably confirm that, in case DALMATINSKA PLOVIDBA is not able to repay all the obligations taken over according to the quoted LOAN AGREEMENT, we bind ourselves to take over ourselves performance of the obligations as described in the LOAN AGREEMENT dated November 8, 1991, out of the earnings of the vessels which are in our ownership."
25. ' He has further pointed out that in the letters dated 8-11-1991 the defendant No,2 and M/s. D.P.
26. Shipping Co. Ltd. have guaranteed the repayment of the amount of loan "out of the earnings of the vessels which are in our ownership, or out of the earnings of the vessels which are on time charter or management with us". According to the learned counsel for the plaintiff this amounts to creating a charge on the vessel and as such it is in the nature of a bottomry bond. The concept of bottomry has been explained by Grant Gilmore in the Law of Admiralty, Second Edition at page 632 as under:--- "Bottomry and respondentia bonds.---These once important maritime financing devices have passed out of use; most probably no living admiralty lawyer has ever seen an example of either.
27. They are mentioned here out of a sense of history and deference for the past. A bottomry bond was a loan on the security of the vessel, and its importance lay in the fact that it did create a maritime lien, while a mortgage did not. A respondentia bond was a loan on the security of cargo. Both bottomry and respondentia bonds were conditioned on the successful completion of the voyage (i.e. if the ship foundered, the loan was discharged). Thre feature, obviously unattractive to lenders, no doubt explains their disappearance."
28. ' Thomas in British Shipping Laws, Volume 14, page 207 has explained the concept of bottomry as under:--- "Over the years bottomry has been consistently viewed by the judiciary as a maritime agreement where under a representative of a ship, in most instances the master, in circumstances of distress and necessity, and in the absence of any other source of finance or credit, hypothecates the ship (or cargo in the case of respondentia) with a view to meeting the necessary expenditure or obtaining credit and so facilitating the safe continuation or completion of the voyage. In brief, both bottomry and respondentia represent methods of dealing with emergencies encountered by the master in the course of a voyage when no other means are available."
29. ' In The Atlas Lord Stowell expounded upon the concept of bottomry in the following terms: "The definition of bottomry bonds which I find in all the writers that have adverted to the subject, are contracts in the nature of mortgages of a ship on which the owner borrows money to enable him to fit out the ship, or to purchase a cargo for the voyage proposed, and pledges the keel or bottom of the ship, pars pro toto, as security for repayment. It is moreover stipulated, that if the ship is lost in the course of the voyage, by any of the perils enumerated in the contract, the lender also shall lose his money; but if the ship shall arrive safe, then he shall be paid back his principal, and also the interest agreed upon, called marine interest, however this may exceed the legal rate of interest."
30. 'Mr. Hassan Zafar, Advocate for the plaintiff on the question of interpretation of Bottomry Bond has relied upon the following passages from the said book Maritime Liens by Thomas, Volume 14 at pages 223 and 224: "Any instrument put forward to the Court as a bottomry bond will be readily received, liberally construed and every fair presumption will be made in its favour. Confronted with contention the Court refuses to observe the presented instrument with a pedantic "nicety" or to disallow the bond on technical and trivial grounds. Throughout, the Court looks to the broad substance and effect of the instrument, which is to be deduced from the instrument taken as a whole and circumstances surrounding it. The particular label by which the instrument is described is not conclusive of its legal nature. The onus of proving the hypothecatory nature of any instrument rests with the lender.
31. ' The particulars usually set out in a bottomry bond are the parties to the agreement, name of the ship, the occasion of the necessity, the principal loan and the interest (premium) payable thereon, details of the voyage during which the advance is to be at risk, a statement that the lender is to bear the mairtime risk, and finally the fact of hypothecation. Given the readiness with which the Court receives written instruments as bottomry bonds it is difficult to specify the extent to which individual particulars are essential to the validity of a bottomry bond. It is however firmly determined that the validity of a bottomry bond is unaffected by the absence of a specified premium or by the omission of an express reference to a maritime risk, if the fact of such a risk may be deduced from a construction of the entire instrument.
32. ' A bottomry bond may be given by a shipowner when on board by a master or a snbstitute master in; the absence of a master by a mate; by a British counsel, and possibly also by a ship's agent."
33. ' The learned counsel for the plaintiff has therefore submitted that two letters of guarantee given in this case by the defendant No,2 and its sister concern should be construed liberally and favoufably.
34. On the other hand Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has submitted that these letters cannot be treated as bottomry bond because neither any charge has been created nor the name of any vessel has been specified in these two letters. He has further submitted that merely because the defendant No,2 and its sister concern had guaranteed to make repayment of the loan out of the earnings of the vessels which are in the ownership of the said defendants No,2 or which are on time charter or management with them, it will not be deemed that a charge has been created on the vessel itself. He has also pointed out that M/s. D.P. Shipping Company Ltd. who had executed the second letter of guarantee have not been joined in this suit.
35. ' From the text of the 2 letters of guarantee quoted above it is apparent that these two letters cannot be treated as bottomry bonds because the C essential requirements of a bottomry bond are missing.
36. ' Mr. Iqbal Siddiqui, learned counsel for the defendant No,1 has also denied that the defendant No,2 are the bare boat charterer of defendant No,1. He has submitted that the defendant No,2 neither have any proprietary interest in the ownership of the vessel nor they beneficially own the said vessel. According to him M/s. Germania International Corporation, Panama City, Panama are the owners of the vessel, defendant No,1 and all the 100 issued shares are owned by them only and none else. According to him even the said shares are already mortgaged with Christiana Bank OG Kreditkasse. He has further submitted that the said owner of the vessel had entered into a time charter with defendant No,2 and the defendant No,2 had no proprietary interest in the vessel of whatsoever nature. Moreover subsequently even the said charter party arrangement was also terminated by the owners which was also accepted by the defendant No,2 and on 11-12-1992 the vessel was redelivered and necessary intimation in this connection was also given to the crew members through the then Master.
37. ' From the copies of documents filed by both the parties, it is an admitted position that M/s. Germania International Corporation are the owners of 100% shares of defendant No,1. However, the learned counsel for the plaintiff has submitted that the defendant No,2, being "Bare Boat Charterers" of the defendant No,1, will be deemed to be the beneficial owner of the vessel on the date of the filing of the suit and as such the suit filed by the plaintiff is maintainable under section 4(4) of the said Ordinance. Learned counsel for the plaintiff has in this connection relied upon Andrea Ursula case (1971) 1 Lloyds' Law Reports 145 = (1971) 1 All E.R. 821 = (1971) 2 WLR 681. On the other hand the learned counsel for the defendant No,1 has, as stated above, submitted that defendant No,2 was time charterer for some time, but that arrangement was terminated in December, 1992. He has further submitted that even as a time charterer the suit filed by the plaintiff against the defendant No,2 is not maintainable. In this connection, the learned counsel for the defendant No,1 has placed reliance on 1984 CLC 1553 M/s. Sun Line Agencies Ltd. v. m.v. Psiloritis, wherein after considering several judgments including the judgment in Ursula case, Saeeduzzaman Siddiqui, J. (as he then was) disagreed with the conclusions of Brandan, J. in Ursula case and agreed with the following conclusions of Robert Goff, J. in Icpngreso del Partido's case (1978) 1 All E.R. 1169 Q.B.D. as the same were more in accord with the plain language of the statute.
38. ' The expression "beneficially owned as respect all the shares therein" refers only to cases of equitable ownership, whether or not accompanied by legal ownership and are not wide enough to include cases of possession and control without ownership, however full and complete such possession and control may be."
39. ' It was further held by Saeeduzzaman Siddiqui, J. as under:-- "A time charterer or a charterer by demise, however, in my opinion, do not fall in the category of a person who beneficially owned as respect majority shares of the ship, as they only beneficially possess the ship for the time being subject to the validity of the Charter Party Agreement and by that reason they do not acquire any right of ownership in the majority shares of that ship."
40. ' The findings given in the judgment referred above are applicable in the present case and fully support the contentions of the learned counsel for the defendant No,1.
41. ' In the circumstances, stated above, I am of the view that the plaintiff has failed to make out a prima facie case for the prohibitory order against defendant No,1. Accordingly the interim order dated 27-2-1993 restraining the K.P.T. authorities from giving clearance to the ship i.e. defendant No,1 is hereby vacated.